With Republicans Like These, Who Needs Democrats?
SACRAMENTO — As this year’s legislative session approached a conclusion on Monday, California’s GOP Senate leader handed out “easy buttons” similar to those used in one office-supply chain’s commercials with the word “NO” stamped on them. It represented some levity as Republicans, who find themselves in a super-minority in the Assembly and Senate, telegraphed their commitment to opposing the Democrats’ usual array of tax-and-spend bills. These Republicans posed for the cameras to apparently reinforce their party’s commitment to fiscal responsibility.
I might have applauded their effort to put up a futile yet noble fight, except that even this act of lighthearted defiance was a farce. Republicans had the chance to vote “no” on two of the most outrageous, fiscally irresponsible bills that came before the Legislature in years — and most of them (only two “no” votes on each bill) voted “yes” or didn’t vote (profiles in courage!). In fact, multiple Republicans signed on as co-authors of the most noxious measure. No Democrat opposed either bill, but at least they avoided the fiscal-responsibility photo-op theatrics.
The two measures are Assembly Bill 1383 and Assembly Bill 1054, both of which dramatically boost public-employee pensions. Ironically, AB 1054’s existence (more on this later) undermines the argument that supporters make for AB 1383, but we can’t expect any legislator to draw even the most obvious conclusions when their union allies are egging them on. It reminds me of the quotation from author and 1934 California gubernatorial candidate Upton Sinclair: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” Unions don’t fund lawmakers’ salaries, but they do back their campaigns.
AB 1383 guts a 2012 pension reform measure called the Public Employees’ Pension Reform Act (PEPRA). Spearheaded by Gov. Jerry Brown in the midst of a budget crisis, this modest law tried to get control of escalating pension costs. Unlike most private-sector workers, California government employees receive defined-benefit pensions that guarantee a payout based on a formula. At the time, most public-safety employees received a “3 percent at 50” plan that allowed them to retire at age 50 with 3 percent of their final salary multiplied by the number of years worked.
That meant these employees — police, firefighters, prison guards — retired with 90 percent of their pay payable to them and their spouses through their end of days. Other public employees received less-generous formulas (such as 2.7 percent at 55), but still retired with enviable amounts at relatively young ages. During that debate, critics pointed to California government workers who were members of the so-called $100,000 Pension Club. Now the average California Highway Patrol officer receives a $114,000 pension after 30 years, per recent reports. The Transparent California database shows scores of state workers receiving pensions far in excess of that number.
The pension problem affected the state budget, of course, as the general fund paid for state-worker pensions. But it was a rounding error in California’s enormous state budget. The real impact came at the local level, where pensions consumed larger shares of municipal budgets and led to service “crowd out” as pension costs forced cities to cut back on public services. At the time, the California Public Employees’ Retirement System (CalPERS) was funded below 70 percent — meaning it had only 70 cents on the dollar to make good on its pension promises.
The latest numbers show CalPERS funding levels at 85 percent. Pension funds invest their money and do well in alignment with market gains — and the stock market has been doing pretty well. But PEPRA deserves credit for slightly boosting retirement ages and trimming benefits for new hires. It also eliminated outrageous pension-spiking gimmicks for every employee, thus dissipating some of the costs.